Soccer's Financial Fair Play Farce

It was announced last month that the Union of European Football Associations (UEFA), the governing body for soccer in Europe, would be investigating the stadium sponsorship deal between Manchester City Football Club and Etihad Airways. This news, while a cause for concern for some in Manchester, has been met with a mix of praise and skepticism from the rest of the soccer-viewing public. UEFA had no choice but to contemplate this step, the tangible results of which have the potential to be far-reaching and weighty, but are likely to be no more than cosmetic.

As background, the UEFA has put in place a body of "Financial Fair Play" rules that are set to take effect from the 2012-2013 season. This 91-page document is aimed at dragging the business of club soccer out of the profligate world of inflated player values and into the currently fashionable realm of financial prudence.

Soccer in Europe, with the runaway commercial success it has experienced over the past two decades, has become a playground for billionaires and a theater for economic imprudence. The most successful clubs compete in the UEFA Champion’s League and UEFA Europa League, in which participation alone guarantees the competitors' rewards in excess of $47 million.

These clubs regularly engage in player trades with stratospheric transfer fees attached (the record for which is held by Real Madrid, who paid $126 million for the services of Manchester United’s Cristiano Ronaldo in 2009) and attract lucrative sponsorship and television deals. With these countless riches on offer, many clubs have adopted the "speculate to accumulate" strategy and have run up debts the likes of which Greece would be ashamed of.

UEFA, with an eye towards protecting the cash cow it has created, has decided that the reckless spending has gone too far, and that unchecked, it would plunge football into the same financial crisis that the rest of the world is so commendably, yet unsuccessfully, grappling with. Apropos, the "Financial Fair Play" rules will prohibit all clubs that do not achieve a "break-even" level by 2013 from the lucrative UEFA competitions, with the inconsequential wiggle room of $71 million being granted for the first four years. In addition to this, the governing body has specified the minimum number of "home-grown" or academy players a club must have, so as to promote local youth football along with a number of other obscure and well-meaning guidelines for how a club should be run.

In regards to Manchester City, the UEFA’s hand has been forced by their own pledge to combat financial frivolity and promote moral management. This is a club that, while languishing in the lower reaches of the English Premier League, was acquired by the investment arm of the Royal Family of Abu Dhabi and has subsequently been transformed into one of football’s global power houses through the sheer might of its (promoters’) balance sheet. The deal which has been signed with Etihad is undoubtedly envisioned as a means to achieve the "break-even" stipulated by the UEFA, given that the $630 million would be accounted as income, against which the expenditure of player purchases might be balanced. The trouble with the deal, as the UEFA has acknowledged, is that the owners of Manchester City have "close links" to the owners of Eithad, suggesting that the $630 million is not fair income, and therefore City should not be allowed to consume the same amount as fair expenditure.

If the investigation concludes that Man City has indeed acted against the spirit of the new rules, then the UEFA will face the tough decision of expelling them from UEFA competitions or have its own image irreparably damaged. The latter is certainly a rock which the UEFA does not want to be pressed against given Manchester City’s global popularity, and the financial hit the sport would take should the club’s multifarious supporters be deprived of its participation on the biggest stage. With most of the other large European clubs also struggling to "break-even" it seems impossible that the UEFA would debar City amidst cries to debar others as well.

As always, a financially doped spectacle is better than no spectacle at all, a state of affairs that would be arrived at it if the biggest clubs did not compete. Worse still, these powerful clubs, with their voluminous supporter bases, may even threaten to break away from the UEFA, an eventuality the governing body must dread. In the end, the UEFA will likely fabricate a justification for why it is on board with the Etihad deal, and that will push football one small step closer to the brink.